Theresa May – to cap or not to cap?

Theresa May was being a bit sneaky pretty much blaming the Pay Review Bodies for the one per cent pay recommendations that have come through since the government announced a one per cent pay cap. Those bodies respond to government direction and so the next batch of reports (for teachers, police, senior civil servants, prison staff) that are in the system and soon to be published have been put together, over a long period, with the one per cent pay cap in force.

There’s been some excitement that Theresa May responded to Jeremy Corbyn’s questions in the Commons by repeating quite a few of George Osborne’s old arguments in favour of austerity. Some commentators think it suggests that the pay cappers have won the day, the battle for a lifting of the cap may be over. Whitehall sources suggest it’s not quite like that.

Theresa May’s government probably has crossed a rubicon when it comes to its thinking on public sector pay. I’m told that three of the ministers who spoke out about relaxing public sector pay controls in the last week or so in interviews (I’d earlier only known of one) cleared their lines with (what they thought was) the Downing Street machine. Boris Johnson, it is suggested, did not.

The letter that goes out at some point “late Summer” (that could be early Autumn in civil service speak) from the new Chief Secretary to the Treasury, Liz Truss, will be the key moment. It looks like it will set a different pay level above the percentage cap for pay awards that take effect from Spring 2018. But there’s no agreement yet on what the numbers should be or how they could be raised.

A new complication for Theresa May as she pursues what is supposed to be a crowd-pleasing policy of pay détente is the amazing reception she got from baying Tory MPs when she regurgitated the old time religion of austerity at Question Time today. And it’s not only Tory MPs but some influential right wing newspapers who seemed to have started a fightback in favour of austerity in public pay.

Theresa May will have a mighty struggle finding the money to fund pay increases and will have to start rolling the pitch for her own troops. Even allowing for a whipping effort that asked Tory MPs to cheer her to the rafters whatever she said, there was some genuine excitement amongst Tories about a “sound money” cause they long tried to sell and which they feel they should have heard much more about in the General Election campaign.